An RTO Comparison:1 SPP and MISO’s Contrasting Approaches

September 19, 2016 of 17

September 19, 2016

An RTO Comparison:1

SPP and MISO’s Contrasting Approaches

Using MISO as a comparison, this paper examines how the Southwest Power Pool (SPP) handles the inherent tension between their role as “independent manager of the grid” with their interest of serving their members’ collective and individual needs as a voluntary organization.

SPP and MISO view their independent RTO roles very differently. SPP pursues a “consensus

independence” approach. While there certainly are exceptions, SPP rarely acts until there is agreement among its members and stakeholders. And, when SPP does act, it is more a ratification and implementation of the members’ agreement. SPP’s long history of very close

relationships with its members, a relatively homogenous membership and limited willingness to take proactive actions that all of its members do not support has created decision-making

processes and stakeholder structures designed to promote consensus and limit dissent. By comparison, MISO’s larger, more diverse footprint with a wider range of stakeholder

interests led MISO to take more of an “objective independence” RTO approach. MISO encourages and accepts stakeholder input but makes its own independent decisions. While MISO

will work with and accommodate its individual members’ needs and wishes, it does so only after it, MISO, has independently concluded that the course of action is in the best interest of (or at least does not hurt) MISO and its entire footprint of members.

These differing approaches are embedded in each RTO’s culture and drive their respective

operations, decisions and stakeholder relationships. Each approach has strengths and weaknesses, and also creates distinctive lenses through which each RTO sees each other, complicating their efforts to work together.

Caveat: SPP and MISO are large, complicated organizations. Thus, to achieve its goal of being

a condensed thought-provoking document highlighting their respective differences and similarities, generalities are necessarily made and exceptions to those generalities along with countless details are ignored or limited.

Organizational Development. The Federal Energy Regulatory Commission (FERC) has

approved ten Regional Transmission Organizations (RTOs) covering much of North America. Each RTO is made up of transmission-owning members that have voluntarily joined together to create the RTO. Beyond those who actually own and operate the transmission lines, each RTO

1 This examination is solely the sole work of Edward Garvey and AESL Consulting. Any errors, mistakes or

omissions are ours alone.

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has an ecosystem of stakeholders. Each RTO has three interconnected duties. The first and

perhaps most important duty is to ensure the reliability of the bulk power grid within its footprint. The second duty is the facilitation of efficient transmission to economically optimize

the generation of its members and reduce the costs to the customers they serve. The third duty is managing the wholesale electric power market within its respective footprint.

While all RTOs perform these three duties, there are considerable differences on how they do it. These differences stem from their: 1) developmental histories (including industry-event

responses); 2) founding members’ goals, needs, desires and make up; 3) organizational cultures; 4) methods for gathering input from their members and stakeholders and 5) decision-making processes. Yet, perhaps the most important distinction stems from how the RTO handles the

inherent tension between its obligatory role as independent grid manager and the various specific needs of its voluntary members.

SPP traces its roots to 1941 when a number of utilities combined their generation and transmission facilities to be what we today think of as a power pool to more efficiently serve an

Arkansas aluminum smelter serving the World War II effort. The forerunner entities continued to operate as a large power pool for decades until it formally became a FERC-approved RTO in

2004. SPP launched a real-time energy market in 2007 and added a day-ahead energy market in March of 2014.

The SPP voting membership is mostly made up of incumbent transmission owners and transmission customers. There is currently little voting representation from independent power

producers, renewable generators, or the environmental community. Competitive transmission providers only recently began participating in SPP stakeholder meetings. Forty of SPP’s members are cooperatives, municipalities, and their generation and transmission providers and

ten are investor-owned utilities. But for a sliver of Texas, SPP does not serve any states that have “restructured” or otherwise enabled retail customer choice.

By comparison, MISO is relatively new, created in the early 2000’s by utilities who recognized the benefits a wholesale market would bring as they sought generation sharing, peak load

balancing, and investment in additional transmission to support growing loads and wind development. Thus, in contrast to SPP’s history, MISO began operating a power pool as well as

real-time and day-ahead electricity markets at its inception. The original (and current) MISO membership is more diverse than SPP’s since MISO has both restructured jurisdictions as well as traditionally regulated jurisdictions. It also has a higher percentage of investor-owned members

and serves both very rural and very urban areas.

A further example of this historical difference can be found in their respective legal organization set-up. While both are non-profit corporations, SPP is set up as a 501(c)(6) – a business league or association of persons having some common business interest. There is no mention or

requirement that the entity serve or operate in the public interest. Rather, 501(c)(6) entities are designed to assist and promote the members of the entity. By contrast, MISO is a 501(c)(4), a

category used by and for entities dedicated to the promotion of social welfare, promoting the



common good and general welfare of the people of the community. While this difference may be

a distinction-without-a-difference, it is indicative that the differing histories and RTO membership make-up have created significant differences in how SPP and MISO function,

operate and interact with their stakeholders. It also indicates how each organization views its mission.

Stakeholder Relations. Based on its long-term power pool origins, SPP maintained its

“homegrown,” informal, almost symbiotic relationship with its members of mostly vertically-

integrated, non-restructured, rural utilities. This close relationship between SPP and its members has created a mutually supportive culture. SPP’s members and stakeholders seem to support SPP and its decisions or, at least, rarely publicly disagree with SPP. In fact, Basin Electric, in

explaining its decision to join SPP to its members, stated that SPP acts more like a cooperative while MISO acts more like an investor owned utility.

In SPP, a stakeholder has to fit into one of SPP’s two voting sectors:

1. Transmission Owners (which must own and operate over 500 miles of transmission) or

2. Transmission Users (including utilities, municipalities, distribution coops, certain generators and TOs with less than 500 miles of transmission line.)

Thus, SPP is member-dominated, seeking informal consensus among all stakeholders, and all stakeholders – regardless of sector – are permitted to participate in all stakeholder meetings.

By comparison, MISO has 10 stakeholder sectors:

1. Transmission Owners 2. Coordination Members 3. IPPs & Exempt Wholesale Gen

4. Municipals, Coops & Transmission Dependent Utilities 5. Eligible End-User Customers

6. Competitive Transmission Developers 7. Power Marketers & Brokers 8. Environmental & Others

9. State Regulatory Authorities 10. Public Consumer Groups

Each stakeholder votes within its Sector and on the Advisory Committee, only the Sector Representatives participate and cast their sector-designated number of votes. The MISO-member

relationship is an arms-length, business-based arrangement. MISO prides itself on its operating efficiency, independence and cost “policing.” MISO works hard to involve stakeholders and

members in its decision-making, but because of its business focus and objective independence, MISO takes actions that it, MISO, deems best for its entire footprint membership. Therefore, it is not unusual for some MISO members and stakeholders to disagree with a MISO decision and do

so publicly. On the other hand, MISO’s “objective independence” allows MISO greater freedom to make decisions and pursue issues that benefit the members in the long run, which might not

otherwise be possible if left up to member consensus.



The less formal relationship between SPP and its stakeholders stems from many different reasons but one may be that there is less diversity of interests and perspectives among SPP stakeholders.

For example, MISO leaders hear from all the sectors; they hear from advocates representing transmission owners, retail-choice states, traditionally regulated states, environmental groups, renewable energy groups, consumer and ratepayer advocacy groups, competitive transmission

owners, load serving entities, and generators. SPP’s stakeholders are much less diverse. While competitive transmission owners are starting to broaden stakeholder views, the rest of the

membership is fairly homogenous. There is no strong environmental or ratepayer advocacy; wind generation has only one consultant as a participant. There are no retail-choice states in SPP, only state-regulated states. In addition, coops and municipal power entities make up a larger part

of the voting members than MISO. As discussed further below, decisions on SPP’s cost allocation issues have been delegated to the Regional State Committee, which is made up of state

regulatory commissioners from each of the states in SPP’s footprint. This delegation allows SPP to avoid stakeholder conflict regarding cost allocation and resource adequacy decisions and assists state-regulated members with transmission cost recovery issues before these same

Commissions.

Relationship with States. SPP’s symbiotic stakeholder relationship extends to the states in

the SPP footprint. The Regional State Committee (RSC) is an arm of SPP and has no independent staff. The Secretary of the RSC is the General Counsel of SPP. While the RSC does have some responsibility specified in SPP’s Tariff (for cost-allocation and resource adequacy),

information is tightly controlled by SPP. By comparison, the Organization of MISO States (OMS) is an independent body with an independent Executive Director, office space and staff. It has the ability to gather information and make filings independent of the RTO but does not have

the delegated cost allocation authority of the SPP RSC.

Because of the consensus-driven approach, as well as SPP’s relationship with the RSC, it is

relatively easy for SPP Transmission Owners to achieve their policy goals. There is very little resistance to decisions made by SPP management from the Members, Board or RSC because by the time that decision is made it has been thoroughly vetted and consensus reached through

multiple working groups and subcommittees, usually over a protracted period of time using significant staff resources. Issues that do not reach consensus or at least supermajority support

rarely make it through the SPP process.

Decision-Making Approaches. In SPP most issues are brought to the RTO from their

members through an established “Revision Request” (RR) process where any stakeholder or SPP staff fills out an RR form to initiate a Tariff, Business Practice or other change. The RR is

reviewed, assigned a priority and enters the SPP study and stakeholder processes. SPP proposes the scope and cost of conducting a project, but if stakeholders want to change the scope or timeline, then SPP leaves it to stakeholders to decide whether the additional cost is justified. By

contrast, when an issue or Tariff revision is raised by a stakeholder in the MISO footprint, MISO (rather than the stakeholder) generally takes the organizational lead by working with interested

stakeholders to formulate a suggested course of action and timeline and presents it to



stakeholders for input within a timeline. MISO attempts to control project costs by efficient and

timely project completion. This includes deadlines on stakeholder inputs.

Although both RTOs utilize stakeholder-run meetings and votes to make recommendations to

their respective Boards, decisions in SPP are made with a casual consensus approach. SPP Staff plays a lesser role in driving the outcomes, and SPP stakeholder votes are rarely close or

contested. By contrast, MISO’s decision-making process is very organized and structured; while all stakeholders can comment at stakeholder meetings, participation is limited at MISO’s Advisory Committee and Board meetings. In SPP all stakeholders can comment during topic

discussions at all meetings, including the Market and Operations Policy Committee (MOPC) and Board.

SPP explicitly cultivates the perception that stakeholders drive SPP’s tasks, and in fact they do since they have a consensus-based culture and SPP frequently relies on stakeholder personnel to

do the issue analysis. SPP presents projects along with proposed optional courses of action and timelines and then allows stakeholders to choose options and adjust timelines. By comparison,

issue and options analysis in MISO is primarily done by MISO staff with stakeholder input and then review. While this allows for deep and independent substantive analysis it can leave stakeholders feeling they have little control.

The relationship between MISO decision-makers and its stakeholders are polite and business-like

while the relationship between SPP executives and staff and the SPP members and stakeholders are much less formal - typically collegial.

Each dues-paying SPP Member has one vote to cast on decisions. Individual votes are cast for all decisions. Though not a requirement, SPP typically asks those submitting a “no” vote to provide

a written explanation for the minutes. As such, many SPP Members abstain from voting when they do not support a decision. In some cases, decisions are approved with a minority of support due to abstentions.

In MISO, each stakeholder Sector, including OMS, holds a certain number of votes that can be

cast as a Sector on decisions. An important distinction between the RTOs is that in MISO each sector and stakeholder-member gets a vote, regardless of whether or not they are formal “dues-paying” MISO members. However, actual votes have become less frequent in the MISO

processes so it appears that MISO and Stakeholders appear to be working more and more collaboratively to find common or consensus approaches.

Board of Directors: Selection & Role. Both RTOs have a Board of Directors (Board)

that is selected after an external and internal vetting process. However, the SPP vetting process

appears less formal when compared to the MISO process. Both SPP and MISO have "nominating

committees" that generally rely on independent executive search firms to find candidates.

MISO’s bylaws specifically require the Nominating Committee to use an independent executive

search firm, whereas SPP’s does not. In SPP, the Corporate Governance Committee – made up

of one Director, seven Members, and chaired by the CEO – puts forth candidates for ratification



by Members. Members can choose not to approve, but they are not given a choice. SPP’s Board

is not involved at all, other than including the Board Chair as one of nine Corporate Governance

Committee Members.

In MISO, a Nominating Committee is formed consisting of three Directors and two Advisory

Committee members. The MISO Nominating Committee is required to put forth at least two

candidates for each Director position. The Directors then get a chance to approve and send on to

the membership at least one candidate for each position. Both RTOs require the members to elect

new Directors. Although SPP Members are only given the choice to agree or disagree with the

Corporate Governance Committee’s recommendation, a supermajority must agree in order for

the candidate to be elected. In MISO, candidates receiving a simple majority of the Members’

vote are elected.

While the Boards of both RTOs have a close relationship with the RTOs’ management and

stakeholders, SPP’s Board appears – consistent with SPP’s consensus independence culture – to

be more integrated into and dependent upon SPP’s management. By contrast, the MISO’s Board

is always seen as and operates as a separate, distinct entity. This distinction can best be seen in

how each Board gets its information. In SPP the Board receives its information primarily from

the SPP executive team. By contrast, while the MISO management certainly provides extensive

information to the Board members, the MISO Board also receives reports directly from the

Transmission Owners Committee, OMS and the Advisory Committee. Also, during each MISO

Board week the MISO Advisory Committee has a “hot topics” session where each sector offers

its views on a selected issue of concern. MISO Board Members are present and ask questions of

the sector representations. Similarly, the lead sector representatives on MISO’s Advisory

Committee make formal presentations of their views to the MISO Board. Thus, the sectors and

stakeholders get to address the MISO Board directly, separately and without MISO filtering their

views. It is not unheard of for a sector representative to use these forums to “make their case”

that the MISO Board should overturn or amend a MISO decision. Such end-runs do not happen

in the SPP settings.

Finally, while the personal relationships between MISO and the individual members of its Board

is both cordial and professional there has been times when MISO Board members have disagreed

publicly, sharply and critically with MISO management. Such times reflect not only a difference

of opinion but also how they view their roles, i.e. the MISO Board sees its role as independent

overseer of the RTO and its management, therefore it is their obligation to make any difference

they have publicly known. This has rarely occurred in SPP, probably for two reasons. One reason

is because of SPP’s consensus approach, i.e. there are less differences of opinion reaching the

SPP Board because they have all been worked out beforehand. Another reason might be that the

SPP Board and its RTO management have the same “inside the club” attitude since the SPP

Board selection process emphasizes the RTO’s culture and not independence, i.e. the Members

of the SPP Board do not necessarily see themselves as an independent voice but an integral part

of the management decision-making team.



The closeness or separation of an RTO’s Board is a double-edged sword. While the closeness of

SPP’s Board with its management can clearly make for a less complicated relationship, the fact

that MISO’s Board is separate or more independent from its management provides a separate

venue to discuss issues affecting the RTO. This often leads to better, deeper, more innovative

decisions. It also lends an air of credibility to those decisions, as any aggrieved party knows that

they had an opportunity to be heard and an independent review.

Relationship with the Market Monitor. The cultural differences and views of

“independence” manifest themselves very distinctly in the relationship between SPP and its Market Monitoring Unit (MMU) vs. MISO and its Independent Market Monitor (IMM).

Market monitoring by an entity independent of the RTO is a FERC requirement designed to make sure the RTO markets operate competitively and efficiently. Not only is the market

monitor supposed to look for manipulation or flaws in the RTO rules or market transactions that would allow “gaming” of the system, it also looks to improve market efficiency. The goal is to promote transparency in the markets and to maintain stakeholder confidence in the RTO’s

independent operations and the market overall. Due to their differing respective cultures, the relationships SPP and MISO have with their respective market monitors is very, very different.

SPP utilizes an internal team it calls the Market Monitoring Unit (MMU) to act as the market monitor. The MMU shares resources with SPP, including legal counsel and some staff. Some

MMU staff have performed non-market monitoring duties for SPP, including during the launch of SPP’s Integrated Marketplace. While this practice is allowed under FERC Order 719, the

practice has been criticized by other RTOs’ market monitors as well as recently mentioned in a FERC audit questioning the independence of SPP’s MMU. While the FERC audit did not specifically find that there had been actual wrong-doing, it raised concerns about the “blurred”

lines of separation between SPP and its MMU. Specifically, the audit criticized the presence of SPP executives in meetings with the MMU and the SPP Board, the use of incentive

compensation for the MMU staff, the shared use of legal counsel and other staff, the MMU involvement in SPP Tariff formation as well as the accessibility of the MMU staff to RTO offices because of shared workspace. While SPP does not appear to want to change this

relationship approach with its market monitor, FERC does have the ability to force changes it sees as necessary to ensure the market monitor’s independence. In essence, the SPP MMU has

been an internal extension of its RTO operations; it is linked with SPP management. To be fair, since FERC raised its concerns, SPP’s Board has taken some small steps (albeit reluctantly) towards a more independent MMU by allowing the MMU to use non-SPP legal and other staff,

delegating MMU staff compensation decisions away from SPP management, physically separating the MMU from the remainder of SPP staff, etc. over the past year due to FERC

concerns, but it has been reluctant to make the MMU truly independent. MISO has a completely different relationship with its market monitor, starting with name. MISO

uses the term most RTOs use: Independent Market Monitor (IMM). Consistent with MISO’s cultural dedication to both functional and operational independence it created an IMM that is

fully independent and separate from MISO’s management and stakeholders with clear and



unambiguous lines of separation. MISO’s IMM is a separate entity and has 24 staff members

made up of economists, engineers, software developers and other professionals, to ensure the market is operating as designed. The IMM staff are employees of an independent external

company and do not share MISO’s resources (other than separate secured space in the MISO building in Carmel.) If (or when) MISO’s IMM has issues with the market operation or proposed rules, the IMM will testify directly to MISO’s stakeholder subcommittees, MISO’s Board and

even FERC.

Thus, like its relationship with its members and stakeholders, MISO values and maintains organizational independence in its market monitor. At the same time, SPP’s approach to its market monitor mirrors its approach with its members: conjoining the monitoring function with

its operations, promoting internal collaboration and coordination that limit independence and possibly efficacy and dissension. However, after FERC raised its concerns, SPP’s Board has

taken steps to allow some MMU independence.

Conclusion. While SPP and MISO each fulfill RTO roles and duties, their organizational

histories, cultures and organizational designs lead to very different operational approaches. The SPP approach is “consensus independence,” which seeks consensus among their stakeholders for

their decisions, thereby limiting dissension. Arguably, this gives SPP greater internal cohesiveness, creates fewer distracting headaches for management and eases the implementation of decisions. It also allows SPP to pursue special or unique arrangements for its members or to

attract new members because they can each get beneficial arrangements, as they did when SPP convinced the Integrated System (Basin, WAPA and others) to join. However, this consensus

approach comes at the expense of decision-making speed, efficiency, creativity and, perhaps, a truly efficient market. SPP rarely takes action that exceeds the comfort-level of a reluctant member. It also creates less transparency and, paradoxically, less stakeholder involvement.

Although SPP encourages all stakeholders to participate there is no automatic participatory role like there is for MISO’s sectors. The result is that SPP leadership may actually be hearing fewer

perspectives. Since MISO started out as a newer, larger, more diverse organization, it created a very different

operational approach – a more formal “objective independence” approach. By comparison to SPP, this approach allows MISO to make more organized, timely, and efficient decisions; it

allows MISO to pursue broader, forward-looking, creative public interest analysis; and there is greater consistency across the footprint. It also gives MISO the integrity of an “independent honest broker” when presenting their decision since it is based on what is best for the overall

footprint. Decisions try to be at the highest (rather than lowest) common point among stakeholders. MISO’s more independent market monitor may give market participants greater

confidence in the efficiency of the market. A downside is that MISO’s independent decisions sometimes leave disgruntled stakeholders. There is a less flexible decision-making structure as issues go through MISO’s committees. Also, some seem to find MISO’s multiple sector

representation design a little constraining. Finally, there are times when MISO, as an independent entity, has assumed a more regulatory relationship with its members, rather than the

collaborative or facilitative role that SPP has.



SPP’s approach may be changing as they have expanded from being a small, mostly homogenous organization to a larger, more diverse one with the addition of its Integrated

Marketplace and the Integrated System (Basin, WAPA and others). SPP’s implementation of a Day 2 market, Order 1000 reforms and the addition of the Integrated System are bringing in more stakeholders, requiring SPP to consider opinions outside its original group of incumbent

utilities – arguably requiring SPP to act more like MISO. One example of this evolution was illustrated during an August 2016 Board meeting when stakeholders realized that SPP costs were

increasing to fund Basin’s transmission build-out in western ND and SPP’s Administrative fees were forecasted to be higher than initially projected and increasing. If accurate, SPP may be undergoing a long, slow, spasmodic and often painful cultural evolution, but an inevitable one.



Appendix A – SPP Organizational Chart

Membership

Chair - Jim Eckelberger

Vice Chair - Harry Skilton

Secty – Paul Suskie

Regional Entity Trustees

Chair - John Meyer

Secty – Emily Pennel

Regional State Committee

President – Patrick Lyons


SPP Board of Directors/

Members Committee

Chair - Jim Eckelberger

Vice Chair - Harry Skilton


Corporate Governance Committee

Chair - Nick Brown


Finance Committee

Chair - Harry Skilton

Secty - Tom Dunn

Human Resources Committee

Chair – Julian Brix

Secty – Malinda See

Market and Operations Policy Committee

Chair - Noman Williams

Vice Chair - Paul Malone

Secty - Carl Monroe

Business Practices WG

Chair - Grant Wilkerson

Vice Chair – Rick McCord

Secty – Ken Quimby

Change WG

Chair – Jim Jacoby

Vice Chair – Michelle Trenary

Secty – Annette Holbert

Balancing Authority Operating

Committee

Chair - Paul Johnson

Vice Chair – Greg McAuley

Secty – Kim Gorter

Operations Training WG

Chair – Denney Fales

Vice Chair – Robert Hirchak

Secty – Michael Daly

Critical Infrastructure

Protection WG

Chair – Eric Ervin

Vice Chair – Mike Lotz

Secty – Lesley Bingham

Model Development WG

Chair – Nate Morris

Vice Chair – Derek Brown

Secty - Anthony Cook

Regional Compliance WG

Chair – Jennifer Flandermeyer

Vice Chair – John Allen

Secty – Kim VanBrimer

Project Cost WG

Chair – Tom Hestermann

Vice Chair –

Secty – Cary Frizzell

Market WG

Chair - Richard Ross

Vice Chair – Jim Flucke

Secty – Debbie James

Operating Reliability WG

Chair – Allen Klassen

Vice Chair – Ron Gunderson

Secty – Casey Cathey

Transmission WG

Chair – Travis Hyde

Vice Chair -

Secty – Kirk Hall

Oversight Committee

Chair - Joshua Martin

Secty – Michael Desselle

SPP Staff

President - Nick Brown

Executive VP - Carl Monroe

Executive VP - Paul Suskie

Senior VP - Tom Dunn

Senior VP - Mike Ross

VP - Michael Desselle, Lanny Nickell,

Bruce Rew, Malinda See, Barbara Sugg

Strategic Planning Committee

Chair – Michael Wise

Secty – Michael Desselle

Updated 01/12/16

Cost Allocation Working Group

Chair – Dallas Rippy

Secty – Tamika Barker

Economic Studies WG

Chair - Alan Myers

Vice Chair – Kip Fox

Secty – Kelsey Allen

Event Analysis WG

Chair – Bud Averill

Secty – Ron Losh

Generation WG

Chair - Mitch Williams

Secty - Derek Hawkins

SPP Staff

Gen. Manager

Ron Ciesiel

Regional Tariff WG

Chair – David Kays

Vice Chair –

Secty – Brenda Fricano

Credit Practices WG

Chair - Mark Holler

Vice Chair - Terri Wendlandt

Secty - Phil McCraw

Seams Steering Committee

Chair - Paul Malone

Vice Chair - Bary Warren

Secty – Brett Hooton

System Protection &

Control WG

Chair – Bud Averill

Secty – Doug Bowman



SPP’s Organizational Structure.

Per its Bylaws, SPP is governed by the following four independent bodies:

The Board of Directors (Board) – manages the general business of SPP

The Regional State Committee (RSC) – provides state regulatory input to SPP

The Regional Entity Trustees (RE Trustees) – oversees SPP’s function as the NERC-

designated Regional Entity

The Membership – provides stakeholder input to the Board

The majority of the action in SPP happens within the Board, the Regional State Committee

(RSC), and their subcommittees. Although the Board is comprised of eight independent Directors, it is also required to meet with and take advice from a group of 24 Member

representatives, known as the Members Committee. For this reason, the Board is often known as the “Board/Members Committee”. The RSC, consisting of state regulatory commissioners from each of the states in SPP’s footprint, is ultimately responsible for cost allocation and resource

adequacy. The RSC and the Board meet quarterly. The requirement that many decisions go through both the RSC and the Board (with heavy participation from Members) reinforces the

heavy member-driven, consensus-seeking culture at SPP. This inclusive culture carries through to the Board’s subcommittee structure. There are several

committees under the Board, but the largest is the Market and Operations Policy Committee (MOPC). The MOPC is truly the gathering point for all formal member participation and

currently has 49 subcommittees feeding it with advice and recommendations. These Organizational Groups meet monthly, on average, and the majority of the major decisions in SPP run through them before getting to the MOPC. With SPP’s culture, stakeholders are brought

along, often very slowly, in these subcommittees. Progress is slow, and many of the meetings are designed to gain consensus through iterative analysis and discussion rather than efficiency and

action. The Regional State Committee (RSC) includes only one subcommittee, the Cost Allocation

Working Group (CAWG), which is the RSC’s workhorse. The CAWG meets monthly and is made up of state regulatory staff.

In SPP, members and interested stakeholders provide input on decision-making by participating in what SPP calls their “Organizational Groups”. SPP’s bylaws calls all stakeholder groups

“Organizational Groups”, but the official name of most groups include working groups or task forces, although some have other names (e.g. “Strike Team”). For the most part, Organizational

Groups are composed of SPP members that have been appointed by the SPP Board of Directors. Each member assigned to an Organizational Group is given one vote, and in most cases requiring a vote, a simple majority decides. But again, actions are rarely taken without a consensus

opinion.



SPP’s meetings are open, with many conducted in person – although nearly all meetings include

a teleconference option. Except for state regulators and Board Members, SPP does not reimburse meeting participants for travel expenses. Meetings are supposed to be conducted under the latest

edition of Robert’s Rules of Order, although this practice varies depending on the Chair of the Organizational Group. Each Organizational Group is also assigned an SPP staff member to act as secretary and keep appropriate minutes. Minutes are required to be posted within seven calendar

days following a meeting, but this is rarely accomplished.



Appendix B – SPP – MISO

SIDE-BY-SIDE COMPARISON

SPP MISO Footprint

All or portions of 9 states…AR, KS, LA,

MO, ND, NM, OK, SD & TX

60,000 miles of transmission lines.

All or portions of 15 states

(reliability)…AR, IA, IL, IN, KY, LA,

MI, MN, MO, ND, SD, WI & Province

of Manitoba

65,800 miles of transmission

Corporate type SPP is organized as a 501(c)(6)… a “business league”

MISO is organized as a 501(c)(4), a

public welfare type of organization

Fuel mix 41.27% Coal 25.53% Gas 25% Renewables (wind/hydro)

8.20% Nuclear

40.59% Gas/Oil

39.65% Coal

12.28% Renewables

7.48% Nuclear

Employees ~600 professionals in one location ~900 professionals in four locations

RTO’s core task SPP’s core task is to deliver reliable energy

(no mention is made of low cost).

MISO’s core task is to deliver reliable

low-cost energy.

RTO 2016 Admin

Costs

36 cents/MWh 34 cents/MWh

Approach to

Independence

SPP is a vehicle for a consensus – it seeks the full agreement of its members on nearly every issue. SPP values member consensus as more important than efficiency

MISO prides itself on its objective

independence – it often takes actions it

deems best for its membership even

over member objection. MISO balances

member consensus with efficient,

timely operations

Stakeholder

Influence

SPP allows stakeholder participation, but

decisions are stacked in favor of the

founding TO members.

MISO allows stakeholders to participate

through their sectors and each sector’s

influence is equal, in theory.

Role of states &

state

organizations

The Regional State Committee (RSC) is an

arm of SPP and has no independent staff or

location. The Secretary of the RSC is the

General Counsel of SPP. While the RSC

does have some baked-in responsibility

(for cost-allocation and resource

adequacy), information is tightly

controlled. In the past, the RSC has

participated in closed, informal lunches

with the SPP Board.

The Organization of MISO States

(OMS) is an independent body with an

independent Executive Director, office

space and Staff. It has the ability to

gather information and make filings

independent of the RTO.



SPP MISO State voting

rights

SPP States have authority over SPP’s cost-

allocation and resource adequacy policies,

but the States have no other voting

authority on other decisions. SPP tries to

keep them informed.

MISO states (OMS) are a sector and

have sector voting rights in all matters

Independence of

Management

SPP management generally assists

Members in coming to a recommendation

to the SPP Board, rarely taking a separate

position. Nearly all SPP decisions are run

through stakeholder groups at some point.

MISO management may or may not

come to the same decision as voted by

its Members. Depending on the nature

of the decision, MISO and the Members

may take the decision to the Board. If

decisions do not need to go to the Board

for approval, MISO mgmt. will decide

the issue

Openness of

Meetings

All Stakeholders may comment during all

SPP meetings, even during its Markets &

Operations Policy Committee (MOPC) and

Board Meetings.

During the Board’s decision-making

process (and generally during all Board

meetings,) only MISO, OMS and TO

Representatives may report to the Board

and answer questions but may not

discuss freely unless called upon to do

so. (The Board allows all attendees an

opportunity to comment at the

conclusions of Board meetings.)

Vision, Mission

& Culture

Statements

SPP states that its Vision is “Helping our

members work together to keep the lights

on, today and in the future.

SPP is about more than power. We’re

about the power of relationships.

SPP’s approach to business is not to do the

same thing our peers do cheaper, faster and

bigger. Instead, we focus on creating and

maintaining a unique culture in which our

staff and stakeholders can collaborate to be

as effective and efficient as possible.

SPP is a steward of our stakeholders’

resources, and endeavors to add value

wherever we can.

The MISO Vision is “To be the most reliable, value-creating RTO” Its Mission is to “work collaboratively and transparently with our stakeholders to enable reliable delivery of low-cost energy through efficient, innovative operations and planning.” MISO is an essential link in the safe, cost-effective delivery of electric power across all or parts of 15 U.S. states and the Canadian province of Manitoba. As a Regional Transmission Organization, MISO assures consumers of unbiased regional grid management and open access to the transmission facilities under MISO’s functional supervision.



SPP MISO Formative

History

SPP was founded in 1941 when eleven

regional power companies pooled their

resources to keep Arkansas’ Jones Mill

powered around the clock in support of

critical, national defense needs.”

Several transmission owners recognized

the benefits of FERC’s vision to form

an independently operated regional

transmission system, voluntarily

coming together in 1998 to establish

MISO. FERC accepted MISO’s

organizational plan and initial

transmission tariff on Sept. 16, 1998,

then approved the MISO as the nation’s

first Regional Transmission

Organization (RTO) in December 2001.

On Dec. 15, 2001, MISO began

reliability coordination and regional

planning services, and initiated

procedures for regional planning,

generation interconnection,

maintenance coordination, market

monitoring and dispute resolution.

Strategic Plan

Foundation

The 2014 Strategic Plan introduces a

fourth foundational strategies:

1. Reliability Assurance:

2. Maintain an Economical, Optimized

Transmission System

3. Enhance and Optimize Interdependent

Systems

4. Enhance Member Value and

Affordability

(SPP’s Strategic Plan is generally updated

every three years, as needed.)

MISO's Strategic Plan is focused on

continually finding ways to provide the

least-cost delivered energy for all

customers through the following

strategic elements:

Facilitate integrated infrastructure

investment

Continue to deliver and communicate

benefits identified in MISO's Value

Proposition

Sustain and grow the membership

Enhance products and performance

Achieve high performance through

people, process and technology

Expand our role as an independent

public policy educator



SPP MISO Value

Proposition

“We believe our value derives from a five-

faceted proposition that is central to our

strategy:

Relationship-based

Member-driven

Independence through diversity

Evolutionary, not revolutionary

Reliability and economics are inseparable”

“Value Delivered. Every Day. With

growing energy demands throughout

MISO's footprint, our services help

ensure reliable, least-cost delivered

energy. MISO’s Value Proposition

documents how we unlock billions in

annual benefits for the region. In 2015,

those efforts provided between $2.1

billion and $3.1 billion in regional

benefits, driven by enhanced reliability,

more efficient use of the region’s

existing transmission and generation

assets, and a reduced need for new

assets.

MISO’s Value Proposition affirms our

core belief that a collective, region-wide

approach to grid planning and

management delivers the greatest

benefits. Our landmark analysis serves

as a model for other grid operators and

transparently communicates the benefits

in everything we do.”

RTO cultivated

culture

SPP cultivates a stated culture of a

“stakeholder driven” process. SPP

generally provides stakeholders with

optional courses of action (including

scopes, timelines and costs) and

recommendations and then allows

stakeholders to choose the course and

timeline in helping develop the decision.

MISO cultivates a culture of seeking

input from stakeholders but making its

own independent decisions.

Reserve margin

calculation

SPP mandates that each member fulfill its

own non-coincident reserve margin

responsibility, which is generally higher

than the allocated system coincident

reserve margin requirement.

However, SPP recently lowered its reserve

margin from 13.6% to 12% which erased

some of the benefit enjoyed by MISO’s

Load. SPP stated that it will also be

considering further reserve margin

changes, including allowing Members to

MISO allocates reserve margin

responsibilities back to Load Serving

Members on a system coincident peak

and allows Members to fulfill their

obligations on a coincident basis, which

is generally lower than a non-coincident

basis. (Per statements by MDU

Resources, Inc. to this writer, this is a

significant benefit to MDU.)



fulfill their reserve obligations on a system

coincident peak level.

SPP MISO State regulatory

structures and

RTO

participation

Homogenous—state jurisdiction over

siting/routing and IOU’s rates

States participate in the Regional State

Committee (RSC). The RSC is supported

by SPP staff. The RSC has jurisdiction

over cost allocation and resource adequacy

policies. The RSC has the Cost Allocation

Working Group (CAWG) to conduct

analysis for RSC. The CAWG is supported

by SPP staff and work is conducted as part

of SPP stakeholder process.

The RSC does not vote on anything but

cost allocation and resource adequacy.

More complex mix of state jurisdiction

over siting/routing and IOU’s rates with

open-access “Customer Choice” in IL

and MI (partially.) which

States participate in the Organization of

MISO States (OMS.) OMS has own

staff and staff subcommittees work

independently from MISO. States are

voting Advisory Committee members

and report directly to Board

Voting

consequences

SPP’s stakeholder culture considers

anything but a yes vote to be anomalous. If

a Stakeholder votes no they are asked to

provide their reasoning in writing to SPP

within a certain timeframe after the vote.

As a result, voting abstentions are

common.

Stakeholders do not hesitate to vote no

or abstain. They may or may not

explain the reasons for their vote during

the meeting. No further action is

required.

Highest

Stakeholder

committee groups

Markets & Operations Policy Committee

(MOPC): Made up of Executives of

Members and Directors: MOPC vets

tasks/projects addressed by Stakeholder

Committees/Working Groups and makes

recommendations to Board. MOPC does

not always concur with Stakeholder

groups.

Advisory Committee (AC): Made up of

representatives from the Sectors.

Members participate in the stakeholder

committees. The AC vets policy matters

and reviews decisions/recommendations

of Stakeholder Committees. AC

members generally participate in

stakeholder processes so are familiar

with topics and supports Committees

recommendations.


An RTO Comparison:1 SPP and MISO’s Contrasting Approaches

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